[00:00:02] Speaker 04:
The next case for argument is 14-5149, Bay County Florida versus United States.

[00:00:24] Speaker 04:
Is it Ms.

[00:00:25] Speaker 04:
Soros?

[00:00:27] Speaker 04:
Whenever you're ready.

[00:00:28] Speaker 02:
The trial court's decision should be reversed because its opinion reflects four legal errors.

[00:00:37] Speaker 02:
First, the trial court erred because its interpretation of non-independent regulatory body failed to take into account the plain meaning of the term non-independence.

[00:00:47] Speaker 02:
Second, the trial court erred

[00:00:49] Speaker 02:
because its interpretation of non-independent regulatory body failed to consider the clause, e.g.

[00:00:56] Speaker 02:
municipal utility, thereby rendering that clause superfluous.

[00:01:01] Speaker 02:
Third, the trial court erred in concluding that the relevant relationship reflected in the definition of non-independent regulatory body was the relationship between the Bay County and the state of Florida.

[00:01:14] Speaker 02:
Finally, the trial court erred in interpreting the agency clause of independent regulatory body because its interpretation rendered that clause a contextual and relied on foreign law.

[00:01:32] Speaker 02:
Beginning with the first error related to... Why don't you start with the last one?

[00:01:35] Speaker 03:
Why don't you tell me why this is not an independent regulatory body?

[00:01:40] Speaker 02:
Yes, Your Honor.

[00:01:41] Speaker 02:
The trial court relied upon the agency clause, and that clause reflects or indicates, quote, agency with less than statewide jurisdiction when operated pursuant to state authorization.

[00:01:53] Speaker 02:
The reason why the trial court erred is actually multiple.

[00:02:02] Speaker 02:
First of all, Bay County does not fall within that definition of independent regulatory body, because it squarely falls into the definition of a non-independent regulatory body.

[00:02:12] Speaker 03:
OK, well, I'm not certain that that makes sense at all to me.

[00:02:15] Speaker 03:
But why isn't it an agency with less than statewide jurisdiction operating pursuant to state authority?

[00:02:23] Speaker 03:
It's definitely operating pursuant to Florida authority, for sure.

[00:02:27] Speaker 03:
That part you're not arguing with.

[00:02:29] Speaker 03:
Well, Your Honor, first of all,

[00:02:31] Speaker 03:
And am I wrong?

[00:02:32] Speaker 03:
Is Bay County operating pursuant to Florida granting them authority?

[00:02:38] Speaker 02:
Well, the county, but not the regulator.

[00:02:40] Speaker 02:
The regulator here is the Bay County Board of County Commissioners.

[00:02:44] Speaker 01:
Now, your whole case is based on Bay County.

[00:02:47] Speaker 03:
But this says state.

[00:02:49] Speaker 03:
I'm sorry.

[00:02:50] Speaker 03:
Let's please continue with the definition.

[00:02:51] Speaker 03:
These are your regs.

[00:02:53] Speaker 03:
And this reg says operating pursuant to state authority.

[00:02:57] Speaker 03:
It doesn't say operating pursuant to a utility, a municipality, a regulator.

[00:03:02] Speaker 03:
It doesn't say any of that.

[00:03:03] Speaker 03:
It says operating pursuant to state authority.

[00:03:05] Speaker 03:
Is Bay County operating pursuant to Florida authority?

[00:03:08] Speaker 03:
Well, Bay County isn't the regulator here.

[00:03:11] Speaker 02:
The board is the regulator.

[00:03:12] Speaker 01:
We have another answer to the question.

[00:03:14] Speaker 01:
I'm sorry?

[00:03:14] Speaker 01:
Judge Moore is asking you to read the language of the independent regulatory regulations.

[00:03:20] Speaker 01:
and simply to answer her questions, yes or no.

[00:03:23] Speaker 02:
Yes, Your Honor, I understand.

[00:03:24] Speaker 01:
Is it an agency with less than statewide jurisdiction?

[00:03:28] Speaker 02:
The county.

[00:03:29] Speaker 02:
Yes.

[00:03:30] Speaker 02:
The county is, right?

[00:03:31] Speaker 02:
I'm sorry.

[00:03:32] Speaker 01:
The county has less than statewide jurisdiction.

[00:03:35] Speaker 01:
Well, the county... Can you just answer the question, yes or no?

[00:03:38] Speaker 01:
Well, that... Are you not capable to answer that?

[00:03:41] Speaker 02:
Well, I mean, the county falls, may fall into that.

[00:03:45] Speaker 01:
May.

[00:03:45] Speaker 02:
May.

[00:03:46] Speaker 01:
But we're talking... Is the county...

[00:03:48] Speaker 01:
This is an agency with less, does it have statewide jurisdiction?

[00:03:54] Speaker 02:
the county, but not the regulating entity.

[00:03:56] Speaker 02:
I'm just asking you.

[00:03:57] Speaker 02:
Yes, yes, Your Honor.

[00:03:59] Speaker 01:
You pitched your case on the county.

[00:04:02] Speaker 01:
You did not pitch your case on the Bay County Utility Regulatory.

[00:04:06] Speaker 02:
No, we pitched our case on the board.

[00:04:09] Speaker 01:
On the board of the county, right?

[00:04:11] Speaker 02:
The board is the regulating entity.

[00:04:14] Speaker 02:
I mean, the Bay County is the local government.

[00:04:17] Speaker 01:
Is the board an agency with less than statewide jurisdiction?

[00:04:21] Speaker 02:
is not an agency with less than statewide jurisdiction.

[00:04:25] Speaker 02:
The board is a creature of local government, Your Honor.

[00:04:28] Speaker 02:
And if I may point you to the record that indicates that the board created the regulatory entity or established the county established the Bay County Board as a regulator of these utilities.

[00:04:44] Speaker 03:
And that's my problem.

[00:04:45] Speaker 03:
My problem is that your argument has morphed considerably in this appeal.

[00:04:49] Speaker 03:
Even in your red brief, throughout the entire red brief, you keep talking about Bay County.

[00:04:55] Speaker 03:
Let me read you all of your headings from the table of contents.

[00:04:58] Speaker 03:
Not once do you say Bay County Board.

[00:05:00] Speaker 03:
In every instance, you say Bay County.

[00:05:03] Speaker 03:
Bay County does not meet the definition of a non-independent regulatory body.

[00:05:07] Speaker 03:
Bay County meets the regulatory definition of an independent regulatory body.

[00:05:10] Speaker 03:
These are the headings that you chose to use throughout your brief.

[00:05:15] Speaker 03:
You do not, at any point in this brief,

[00:05:18] Speaker 03:
make it clear to us, although I understand your argument has now sort of morphed into that, that oh no everybody, you're looking at the wrong entity.

[00:05:27] Speaker 03:
The only relevant entity that is the one that regulates is the board.

[00:05:31] Speaker 03:
It is not, in fact, the county.

[00:05:33] Speaker 03:
Throughout this entire brief, you say, Bay County.

[00:05:36] Speaker 03:
Bay County, Bay County.

[00:05:38] Speaker 02:
Your Honor, we do refer to the board as the regulating entity.

[00:05:41] Speaker 02:
I mean, our argument, particularly in our background section and when we explicate our argument, the regulating entity is the board.

[00:05:50] Speaker 02:
I mean, Bay County doesn't dispute that.

[00:05:53] Speaker 02:
The five members of the County Commission, which comprises the Bay County Board of County Commissioners, are the five individuals.

[00:06:01] Speaker 02:
Those five individuals are the same five individuals that act in a regulating capacity.

[00:06:08] Speaker 03:
I'm sorry.

[00:06:09] Speaker 03:
You should have stopped me.

[00:06:11] Speaker 03:
You're used to being the red brief.

[00:06:12] Speaker 03:
You're not familiar with the blue brief status.

[00:06:14] Speaker 03:
So let me go to your table of contents instead.

[00:06:18] Speaker 03:
Bay County is a non-independent regulatory body.

[00:06:20] Speaker 03:
Bay County does not satisfy the definition of an independent regulatory body.

[00:06:25] Speaker 03:
Bay County constitutes an independent regulatory body.

[00:06:28] Speaker 03:
Just Bay County, Bay County, Bay County.

[00:06:30] Speaker 02:
But Your Honor, I mean that's the issue here.

[00:06:33] Speaker 02:
Is Bay County

[00:06:34] Speaker 02:
which is comprised of both the legislative arm, which also sits as a regulating arm, and the utilities independent one from the other.

[00:06:46] Speaker 02:
Based on a plain reading of these definitions, Bay County is non-independent.

[00:06:51] Speaker 02:
And the reason is clear.

[00:06:53] Speaker 02:
The five individuals that make up the county board, and of course we discussed the background, in our background section, in our opening brief, we explicate

[00:07:01] Speaker 02:
what the Bay County Board of County Commissioners does in its regulating capacity, and what it does as a legislative arm.

[00:07:09] Speaker 02:
And those two things are one and the same.

[00:07:12] Speaker 01:
So we have here a situation where... What you're stuck with is a definitional problem.

[00:07:19] Speaker 01:
Your first argument is morphing through the entire thing, i.e.

[00:07:23] Speaker 01:
independent means independent, and we know that Bay County Predatory Board and the county aren't independent because they're all the same.

[00:07:30] Speaker 01:
But your regulation starts off and says non-independent regulatory body means.

[00:07:37] Speaker 01:
Means means there's an equal sign, an equation.

[00:07:40] Speaker 01:
So what the lower court read, and the way I'm reading this regulation, is to say whoever wrote this regulation maybe should be taken out and have their mouth washed out or whatever you do to people that write bad regulations.

[00:07:55] Speaker 01:
But the regulation are regulations that don't mean what you wanted them to say.

[00:08:00] Speaker 01:
Non-independent means.

[00:08:02] Speaker 01:
So non-independent is a body.

[00:08:06] Speaker 01:
So imagine a regulation that says black means white for purposes of this case.

[00:08:13] Speaker 01:
Black means white.

[00:08:15] Speaker 01:
Now, it comes up to me and the government says, no, no, no, black doesn't mean white, black means black.

[00:08:21] Speaker 01:
And I say, well, excuse me, the regulation says black means white.

[00:08:25] Speaker 01:
And I'm going to enforce the regulation for its plain meaning.

[00:08:29] Speaker 01:
So your answer to your first argument of the meaning of independent seems to me that whoever wrote the regulation didn't hear you talking.

[00:08:38] Speaker 01:
What's your response to the argument that non-independent regulatory means that

[00:08:45] Speaker 01:
non-independence is defined by what follows after the word means in regulation.

[00:08:50] Speaker 02:
Well first of all, yes Joan, I'd like to respond to your question.

[00:08:54] Speaker 02:
First of all, the definition includes a textbook example of a non-regulated utility in that EG clause.

[00:09:02] Speaker 01:
And that may well be true.

[00:09:05] Speaker 01:
But this particular regulatory scheme, with the county the way it was set up, the county having been created by the county and the board having been created by the state, right?

[00:09:18] Speaker 02:
The county was created by the state for it, yeah.

[00:09:21] Speaker 02:
But going on, you know, in addition... And who's the board created by?

[00:09:25] Speaker 03:
Well, the... The board of constitution isn't the board also created by the state?

[00:09:32] Speaker 03:
what i have a lot of competition non-intermediate regulatory capacity one again if i didn't ask you if a particular regulatory capacity was created by the state i asked the board was created by the state under the florida constitution expressed the commission the commission but the board itself and we need to be included in the board

[00:09:52] Speaker 02:
I believe the commission is discussed in the Florida statutes.

[00:09:59] Speaker 01:
So both the board and the county were created by the state.

[00:10:04] Speaker 02:
Well, the county was created by the state.

[00:10:08] Speaker 01:
I'm actually... You should not answer this, because you keep talking about the board earlier.

[00:10:13] Speaker 03:
Let me read the Florida Constitution to you, just in case you don't have it handy.

[00:10:17] Speaker 03:
The governing body of the county shall be a board of county commissioners.

[00:10:21] Speaker 03:
Isn't that what this is?

[00:10:22] Speaker 03:
but that does not speak to the regulating arm of the Bay County government.

[00:10:27] Speaker 03:
No, that's an activity that these people, the governing body of the county shall be a board of county commissioners, that is simply an activity that those people perform.

[00:10:39] Speaker 03:
But whether or not they are the governing body of a county shall be a board of commissioners, it seems to me that's what they are, not what they do, right?

[00:10:47] Speaker 02:
Well, Your Honor, the Joint Appendix reflects the fact that

[00:10:51] Speaker 02:
The Bay County, Bay County created or determined that the Bay County Board would serve a regulatory function and that's at JA20598-99.

[00:11:02] Speaker 03:
That's just the county deciding which

[00:11:06] Speaker 03:
activities to give the board, which is expressly created under the Florida state constitution.

[00:11:11] Speaker 03:
Well, that's good, Your Honor, because that is expressly saying which activities we're going to delegate to or allow the board to perform.

[00:11:18] Speaker 02:
But the default regulation asks us to look at the regulator.

[00:11:22] Speaker 03:
No, but it's actually, it doesn't.

[00:11:26] Speaker 03:
It asks us to figure out who created the regulatory body.

[00:11:30] Speaker 03:
The regulatory body was created by the state of Florida because the body, whether the body is the board or the body is the county, each of those two things were in fact created by the state of Florida.

[00:11:41] Speaker 02:
No, Your Honor.

[00:11:43] Speaker 02:
I beg to differ, with all due respect, non-independent body means a body that regulates the utility.

[00:11:50] Speaker 02:
That body under this record is the Bay County, is the board as a regulator.

[00:11:57] Speaker 02:
And that board as a regulator, based on this record, was created by Bay County.

[00:12:02] Speaker 02:
And again, K80598... No, no, no.

[00:12:03] Speaker 01:
What board are you talking about?

[00:12:05] Speaker 02:
Well, I'm looking again, Your Honor, at the definition of non-independent regulatory body.

[00:12:10] Speaker 01:
I see that.

[00:12:10] Speaker 01:
I mean, there's a lot less talk back and forth about who created what.

[00:12:14] Speaker 01:
And you have said that the county and the county board were created by the state, right?

[00:12:22] Speaker 01:
That's reflected in the report.

[00:12:23] Speaker 01:
That's clear, right?

[00:12:25] Speaker 01:
Now the only thing that was created in the record that I can see that was created not by the state, but it was created by the county or by the county board was the Bay County Utility Regulatory Authority.

[00:12:39] Speaker 01:
And that's cited on page four of your brief, and there's no more citation to it throughout the entire case.

[00:12:46] Speaker 01:
You have never argued that the Bay County utility regulatory authority is the centerpiece in this case, and that it is a non-independent body.

[00:12:58] Speaker 02:
No, Your Honor.

[00:12:59] Speaker 02:
I mean, the Bay County Utility Regulatory Authority, in 2004, that was organized by Bay County.

[00:13:07] Speaker 02:
I just wanted to make sure, Your Honor, to the record.

[00:13:09] Speaker 01:
The oldest regulation has been going on since 1966, right?

[00:13:12] Speaker 01:
No, actually it was... On the water, one of the two was forever.

[00:13:16] Speaker 02:
Well, the DeFarce was promulgated in the 90s.

[00:13:19] Speaker 02:
The default provisions.

[00:13:21] Speaker 01:
Well, I understand it, but I mean, the basis for how long it's been down there, it's been buying its water power for a long, long time.

[00:13:28] Speaker 02:
Well, the contracts have been, yes, long standing over decades.

[00:13:31] Speaker 02:
But Your Honor, what J.A.

[00:13:34] Speaker 02:
20598 through 99 reflects is

[00:13:37] Speaker 02:
the regulatory authority determining that the Bay County Board would be the rate setter.

[00:13:42] Speaker 02:
So it determined in this certificate that the regulatory function of the board would be that the Bay County Board of County Commissioners, one set of five individuals would be the same individuals

[00:13:56] Speaker 02:
that would be the rate setters in the county.

[00:14:00] Speaker 01:
That, Your Honor, is not a relationship that is... For purposes of running the second definition for a non-independent body, you need to know who creates whom, right?

[00:14:10] Speaker 02:
Yes, Your Honor.

[00:14:11] Speaker 02:
And our argument is the rational construction of this definition is the body should be construed as the regulator.

[00:14:23] Speaker 02:
It can't be, the regulator is not Bay County as an amorphous entity.

[00:14:27] Speaker 02:
It is these five individuals.

[00:14:28] Speaker 01:
But when you read the definition, technically, which is the way the definition was read by the lower court, they said when you're looking at who creates whom, like, you know, in Genesis, they said that the situation here is that the state created the body that does the regulating.

[00:14:48] Speaker 02:
That definition doesn't make any sense, Your Honor.

[00:14:51] Speaker 01:
You say it doesn't make any sense, but what I'm saying to you is a regulation that says black means white doesn't make any sense either.

[00:15:01] Speaker 02:
That's not the theory we're espousing here.

[00:15:04] Speaker 02:
The non-independent regulatory body definition clearly provides an example of an unregulated entity that is equivalent to Bay County utilities.

[00:15:14] Speaker 02:
A plain reading definition gets you there.

[00:15:17] Speaker 01:
Also what gets you there is the Air Force... If EG means in all cases that nothing else can be included.

[00:15:23] Speaker 01:
EG doesn't mean that it is equal to.

[00:15:26] Speaker 02:
Well, it's under a plain meaning.

[00:15:28] Speaker 02:
EG means an example.

[00:15:30] Speaker 02:
It's for sex force an example.

[00:15:32] Speaker 01:
And this example is equivalent.

[00:15:33] Speaker 01:
But the lower court here said this, you've got an odd animal in Bay County.

[00:15:39] Speaker 02:
Well, the lower court didn't even look at this clause.

[00:15:41] Speaker 02:
It didn't even help us understand what this clause means.

[00:15:44] Speaker 02:
It just rendered its purpose, which under this court's decision is an improper way to ensure definition.

[00:15:50] Speaker 01:
By saying you look to see who created the regulator in Bay County.

[00:15:55] Speaker 02:
Bay County created the regulator in, again, JA 20598 through 99 shows that Bay County determined that the five members of the county commission would sit in a regulatory capacity.

[00:16:09] Speaker 02:
I mean this, and again your honor, these DFAR provisions are meant to look at the regulating entity and to determine whether that regulating entity has a independent oversight position.

[00:16:24] Speaker 02:
So if one, an independent regulatory body has independent oversight, such as a statewide entity like the Florida Public Service Commission.

[00:16:32] Speaker 02:
It is independent because it has independent oversight.

[00:16:35] Speaker 02:
It's not a situation which obtains here where the county,

[00:16:39] Speaker 02:
utilities are the rates for the... Don't get me wrong.

[00:16:43] Speaker 01:
I don't disagree with you.

[00:16:45] Speaker 01:
that maybe the intent of the person that wrote the regulations was to say, basically, independent regulatory bodies are state PUCs.

[00:16:57] Speaker 01:
Period.

[00:16:57] Speaker 01:
Period.

[00:16:58] Speaker 01:
Every single state in the union has got a PUC.

[00:17:00] Speaker 01:
Grant Florida has one.

[00:17:03] Speaker 01:
Yes, your honor.

[00:17:04] Speaker 01:
And they probably meant to say, non-independent regulatory bodies means any other body that may be regulated.

[00:17:11] Speaker 01:
But not a state PUC.

[00:17:13] Speaker 01:
But that's not what they choose to state.

[00:17:16] Speaker 01:
Because they recognize in the independent definition that you could have an entity that is less than statewide.

[00:17:23] Speaker 01:
So a state government can say, well, they're a whole handful of regulators.

[00:17:28] Speaker 02:
Right?

[00:17:28] Speaker 02:
Your Honor, but that clause, the agency clause, it is not

[00:17:34] Speaker 02:
The agency clause cannot be read in isolation the way the trial court read it.

[00:17:40] Speaker 02:
It honed on one clause in the definition.

[00:17:43] Speaker 02:
It didn't look at the plain meaning of the term independent or non-independent.

[00:17:49] Speaker 01:
It told us through its reference to state authority how it interpreted the non-independent regulatory body clause.

[00:17:56] Speaker 01:
That's the only explanation that I could see in the judge's opinion for why he was talking about when you look at the relationship between the state and the other.

[00:18:06] Speaker 02:
And the only way it got there was by resorting improperly to Florida law.

[00:18:12] Speaker 01:
Improperly importing Florida law?

[00:18:16] Speaker 02:
Resorting to Florida law.

[00:18:18] Speaker 01:
clause, the agency clause, does not by itself lead to the conclusion that the trial court... If the regulation asks you whether or not you have an agency with less than statewide jurisdiction, right?

[00:18:32] Speaker 01:
The only possible source of law to tell you whether an agency does or does not have statewide jurisdiction is state law.

[00:18:40] Speaker 01:
I know your argument that you can't look at state law at all for deciding this case, to me, is wrong.

[00:18:48] Speaker 02:
Your Honor, the whole point of the DFARs was to create uniform procedures governing federal procurement.

[00:18:57] Speaker 01:
And what I was trying to say earlier is the government didn't put its best regulation brighter on the task here.

[00:19:07] Speaker 01:
And this problem can be solved very, very simply by simply rewriting this regulation.

[00:19:13] Speaker 01:
Very simple.

[00:19:14] Speaker 01:
It took me what, 32 seconds to say it?

[00:19:19] Speaker 01:
Independent means independent means state PUCs or something that is a state PUC for half the state.

[00:19:26] Speaker 01:
Everything else is non-independent.

[00:19:29] Speaker 01:
It led to this particular problem.

[00:19:32] Speaker 01:
You can't fault the judge for his reading of the regulation on independence because when we finally got you to answer the question, you agreed.

[00:19:43] Speaker 01:
I heard you didn't disagree that the Bay County is an agency with less than statewide jurisdiction that operates pursuant to state authority and it has the power to fix, establish, or control the rates for utility supplies.

[00:19:59] Speaker 02:
Your Honor, but that provision has to be read with the non-independent regulatory body provision.

[00:20:05] Speaker 01:
Then when I read it with the non-independent,

[00:20:08] Speaker 01:
and I recognize that Bay County and the board were created by the state, the regulation doesn't fit them.

[00:20:16] Speaker 01:
The non-independent simply, the shoe simply doesn't fit them.

[00:20:20] Speaker 01:
What you say is, well, it's a shoe meant to fit them.

[00:20:25] Speaker 01:
Everybody knows the shoe meant to fit them.

[00:20:28] Speaker 01:
But Your Honor, I think the key clause... And that's what Judge Miller said when she had the case, the easiest case I ever saw, she said.

[00:20:34] Speaker 01:
Government wins.

[00:20:36] Speaker 01:
But when you bear your eyes down on the language of the regulation, you have a problem.

[00:20:42] Speaker 02:
Well, Your Honor, I submit that the key clause here is the EG clause, and that it gives us a paradigm example.

[00:20:49] Speaker 01:
It's an example.

[00:20:50] Speaker 01:
And it would work in the example where your equation, your black equals white, doesn't work the other way.

[00:21:01] Speaker 02:
Also instructive is the policy contained in the DFARs, just a few provisions away.

[00:21:07] Speaker 01:
Are you invoking the Supreme Court's recent decision in the Affordable Care Act?

[00:21:14] Speaker 01:
Is this one of those exceptional cases when we walk away from Chevron?

[00:21:19] Speaker 02:
No, Your Honor.

[00:21:20] Speaker 02:
I mean, but the defarce provision, it's just, it's sent towards the... This is just a garden variety Chevron case.

[00:21:26] Speaker 01:
The regulation means what it means.

[00:21:29] Speaker 01:
Unfortunately, it doesn't mean what the government meant it to mean.

[00:21:33] Speaker 01:
I don't have the authority to get in the mind of the regulation writers.

[00:21:38] Speaker 02:
But there is within the DFARs an explication of why an independent regulatory body gets the presumption of fair and reasonable rates.

[00:21:50] Speaker 02:
And the reason is because it has independent oversight

[00:21:54] Speaker 02:
And that policy is set forth in the DFARS at section 241.201.

[00:22:01] Speaker 02:
It's just a few provisions away from the definitions.

[00:22:04] Speaker 02:
And that policy statement sets forth the policy that the Department of Defense, as a matter of

[00:22:12] Speaker 02:
affords independent regulatory bodies with the presumption of rate-setting that's fair and reasonable.

[00:22:20] Speaker 02:
And the reason why, Your Honor, is because those independent entities, like the Florida Public Service Commission, are independent of the utilities that they regulate, that they set rates for.

[00:22:33] Speaker 02:
In Bay County, we have no such scenario.

[00:22:36] Speaker 04:
Okay, I'm going to cut you off.

[00:22:37] Speaker 04:
I think we've heard your response.

[00:22:38] Speaker 04:
Let's hear from the other side.

[00:22:49] Speaker 00:
to be a maybe you know it's actually bill your honor but no it looks like you'll I was a well when are you from the Maryland I am not going to help me law school because my professor thought I was so that that was good

[00:23:07] Speaker 00:
Along with my colleague Eric Mead, I represent Bay County, Florida in this appeal, and I think the court is honed in on the issue here.

[00:23:13] Speaker 00:
The issue to us is fairly straightforward.

[00:23:16] Speaker 00:
Does Bay County qualify as an independent regulatory body as that term is defined in the DFARs?

[00:23:23] Speaker 00:
not as the government wishes it was defined or using a plain-meaning dictionary definition because in fact the DFARS has a very specific definition and the Court of Federal Claims applied that definition very literally using the plain language of that regulation and found that Bay County was in fact under that regulation an independent regulatory body and also not a non-independent regulatory body.

[00:23:48] Speaker 00:
So if you look at the plain language we talked about, and the court has been over that many times already today, there is no question that the government has never disputed that Bay County is an agency with less than statewide jurisdiction.

[00:24:01] Speaker 00:
And there's no question that Bay County operates pursuant to state authority when it fixes utility rates.

[00:24:08] Speaker 00:
Section 153.03 of the Florida statutes very specifically delegates that authority to counties in Florida to set and establish utility rates.

[00:24:18] Speaker 00:
And a county unquestionably is an agency of less than statewide jurisdiction under Florida law, but frankly we believe under the laws of every other state.

[00:24:27] Speaker 00:
So when you have an entity like big county that meets that definition and meets it squarely, that should end the debate.

[00:24:36] Speaker 00:
Then if you look at the definition of non-independent regulatory body, which is not a mirror image definition, one would expect it to be, but as Judge Clevercher pointed out, it's not the most well-written regulation of all time.

[00:24:50] Speaker 00:
states that non-independent regulatory body is a body that regulates the supplier, which is owned or operated by the same entity that created the regulatory body.

[00:24:59] Speaker 04:
Yeah, but if the Bay County regulatory authority is the relevant regulatory body in that section, then it fits perfectly.

[00:25:08] Speaker 00:
If that was the case, but in fact that's not the case, and there's a couple points I want to make about that.

[00:25:14] Speaker 00:
First, I think as Judge Cleverger pointed out, the government has never argued, below or now, in their briefs, that that was the regulatory body.

[00:25:21] Speaker 00:
They've still argued that it was the Board of County Commission.

[00:25:24] Speaker 00:
And that Bay County Court of County Commissions did establish the Bay County Regulatory Authority by ordinance.

[00:25:30] Speaker 00:
But when you read that ordinance, that regulatory body only governs private utilities within the county.

[00:25:38] Speaker 00:
It specifically does not govern the county rates.

[00:25:40] Speaker 01:
In other words, it governs... Can you point me that, say 20569?

[00:25:46] Speaker 00:
It's section 25-279 of the Bay County Ordinance.

[00:25:55] Speaker 01:
I guess it's smaller than I thought.

[00:25:58] Speaker 00:
There is a reference to this, Your Honor, at Joint Appendix 20578.

[00:26:01] Speaker 00:
20578?

[00:26:02] Speaker 01:
20578 is where rates and charges were stated.

[00:26:13] Speaker 00:
Well, it's 20578, Section 4A, and it restates what the regulation says.

[00:26:20] Speaker 01:
And what does this say?

[00:26:21] Speaker 01:
It's only private utilities?

[00:26:23] Speaker 00:
It says, a utility in parentheses other than one owned or operated by the county or by a municipality operating within its corporate limits or by a municipality with cooperative operating within its franchise service territory, may only charge rates and charges that have been approved by the authority.

[00:26:39] Speaker 00:
So this regulation says, and again the ordinance itself is 25-279, that the regulatory authority only sets rates for people besides cities that operate within the county and the county itself.

[00:26:53] Speaker 00:
In essence, what the regulatory body does is establish, is review retail rates.

[00:26:58] Speaker 01:
So the regulatory body is going to regulate others, but not this particular utility.

[00:27:02] Speaker 01:
Exactly.

[00:27:03] Speaker 01:
So that's the reason why the government isn't arguing it, because it's out of the case.

[00:27:08] Speaker 00:
Exactly.

[00:27:08] Speaker 00:
The Bay County Board of County Commissioners is the regulatory body in this particular case.

[00:27:12] Speaker 00:
As the court has pointed out, the Bay County Board of County Commissioners was in fact established by the state of Florida.

[00:27:18] Speaker 03:
We didn't touch upon it with the government, but one of the arguments they sent a chunk of their briefing on was the notion that they were entitled to deference.

[00:27:27] Speaker 03:
From where is the clearly established government position to which we should give deference?

[00:27:33] Speaker 00:
Well, that's the question that I was never able to fully answer myself from reviewing the brief.

[00:27:37] Speaker 00:
There was a law review article.

[00:27:38] Speaker 00:
They also cited a couple of things.

[00:27:41] Speaker 03:
Wait, but it couldn't possibly be a law review article.

[00:27:43] Speaker 03:
I had a law review article written by somebody and published in a law review.

[00:27:48] Speaker 03:
of the clearly established government position on this interpretation?

[00:27:56] Speaker 00:
I agree and I guess I have to defer to the government to come up with the answer to that question because I was wondering what I was missing.

[00:28:04] Speaker 00:
I don't think you're missing anything there your honor because again they've got to show that the secretary has adopted this position and their position in the brief is essentially trust that the secretary agrees which is a fine litigation position

[00:28:16] Speaker 00:
But that goes back to the issue of having not raised this below.

[00:28:19] Speaker 00:
The Court of Federal Claims, had it been raised below, could have asked that question, could have asked for even evidence on the issue to find out whether there is a clearly established Air Force position on this.

[00:28:30] Speaker 03:
We do, don't we, give deference to litigation positions.

[00:28:34] Speaker 03:
I mean, it's a much lesser form of deference, but even if the government is

[00:28:38] Speaker 03:
only first confronted with it in the course of litigation.

[00:28:41] Speaker 03:
If they articulate a position, it's still entitled to some deference.

[00:28:44] Speaker 00:
There have been cases on both sides of that issue, but I recognize there are certainly cases where that has occurred.

[00:28:50] Speaker 00:
But that is only when it's the secretary's position.

[00:28:52] Speaker 00:
But more important in this case, it only applies when the regulation is ambiguous.

[00:28:58] Speaker 00:
And Christensen, the U.S.

[00:28:59] Speaker 00:
Supreme Court

[00:29:00] Speaker 00:
held very clearly, if it's not ambiguous, you don't even look at the deference issue.

[00:29:04] Speaker 00:
And I think that that's what the Court of Federal Claims here did.

[00:29:06] Speaker 00:
As they said, this is poorly drafted or not.

[00:29:09] Speaker 00:
This regulation is not ambiguous, and the facts fit squarely within it.

[00:29:13] Speaker 00:
And the other argument we made in the brief, which I think is a valid one, I don't think the Court needs to reach it today, but can the Air Force as one of the many entities

[00:29:22] Speaker 00:
that is involved in the DFARS process have a definitive interpretation of the DFARS, because it is not actually the agency that created the DFARS.

[00:29:31] Speaker 00:
The DFARS was created by a conglomeration of agencies, as the court is aware, led by the DOD, but the problem with their position is, and it may not be the case here, but it could happen in other cases, and we cited an example.

[00:29:43] Speaker 00:
You could have a situation where the Army says that a regulation means one thing and the Air Force says another,

[00:29:48] Speaker 00:
both interpreting the DFARs, how can you have, how can the court give deference to agency interpretations of regulations that other agencies have the same control over?

[00:29:57] Speaker 00:
But I don't think you need to reach that issue, because as we pointed out, there's no definitive position other than their litigation position.

[00:30:04] Speaker 00:
And again, the regulation, even by their own admission, is not ambiguous.

[00:30:09] Speaker 00:
It's, again, maybe not well-drafted, but it's simply not ambiguous.

[00:30:13] Speaker 00:
And I think the issue, we talked about the playmating of the independent and why

[00:30:18] Speaker 00:
would the regulation be drafted this way?

[00:30:20] Speaker 00:
There actually is an explanation for why the regulation would be drafted this way.

[00:30:24] Speaker 00:
That is because essentially DOD says we're going to trust certain agencies, certain bodies to do the right thing.

[00:30:35] Speaker 00:
We're going to trust the Federal Energy Regulatory Commission.

[00:30:38] Speaker 00:
We're going to trust them

[00:30:39] Speaker 00:
We're going to trust statewide agencies like the public service commission.

[00:30:44] Speaker 00:
We're going to trust even lower agencies from the state if they're operating under state authority.

[00:30:49] Speaker 00:
The way you can look at that is if you look at the regulation 241.201, the reason they do that is as a matter of comedy.

[00:30:59] Speaker 00:
What the regulations say is we're going to distrust that the state and the state agencies operating under state authority are going to do the right thing.

[00:31:06] Speaker 00:
And one of the reasons they do that is what happens here.

[00:31:09] Speaker 00:
When Bay County as a county commission sets these rates and approves these rates, it does so in a public meeting, duly advertised,

[00:31:17] Speaker 00:
On the agenda, there are all the requirements of Florida law.

[00:31:20] Speaker 00:
There are constitutional and statutory requirements that limit what it can do.

[00:31:24] Speaker 00:
We point out in this particular case that Bay County has to charge everybody what it charges the Air Force.

[00:31:29] Speaker 00:
It cannot discriminate against the Air Force.

[00:31:32] Speaker 00:
It has to charge the Air Force the same thing that it charges a city or a homeowner or whatever for wholesale rates.

[00:31:38] Speaker 00:
So there are things that give protection to the government in this situation, and that's what the regulatory scheme says.

[00:31:45] Speaker 00:
So, you know, going back to, I think, again, we have what the Court of Federal Claims found, a plain language situation here.

[00:31:52] Speaker 00:
As Judge Pepperidge pointed out, if the regulation says black equals white, then black equals right, white.

[00:31:58] Speaker 00:
And you can't try to say, well, that's not what it meant.

[00:32:01] Speaker 00:
Again, may not have been the best draft of regulation in the world, but it says what it says.

[00:32:06] Speaker 00:
And the government, frankly, doesn't really contend that the regulation doesn't cover Bay County.

[00:32:11] Speaker 00:
They just say it shouldn't cover Bay County in this particular situation.

[00:32:16] Speaker 00:
So for those reasons we believe the court of federal opinion is correct and should be affirmed.

[00:32:22] Speaker 04:
Thank you.

[00:32:25] Speaker 04:
Will we store two minutes?

[00:32:28] Speaker 02:
Thank you your honor.

[00:32:30] Speaker 01:
I'm starting with Mr. Beal.

[00:32:32] Speaker 01:
Is this a test case?

[00:32:33] Speaker 01:
I mean are there many other quote municipalities out there that are structured the way this one is?

[00:32:43] Speaker 02:
Your honor I can't

[00:32:45] Speaker 02:
I would imagine there are many.

[00:32:49] Speaker 01:
Is privatization still going on?

[00:32:51] Speaker 01:
I mean, these reservations were born out of the privatization program.

[00:32:57] Speaker 02:
I believe so because they were drafted in the 1990s.

[00:33:03] Speaker 02:
But Your Honor, just getting back to one of Mr. Bell's comments related to comedy or the mention of comedy.

[00:33:09] Speaker 02:
in the policy provision of the D FARs.

[00:33:12] Speaker 02:
Again, that's 241.201.

[00:33:15] Speaker 02:
Comedy is a notion that's usually extended to a state entity by a federal entity.

[00:33:21] Speaker 02:
It's not a notion, a doctrine, that's extended to a local government here, such as Bay County here.

[00:33:28] Speaker 02:
Your Honor, also, back to... Yeah, but it is comedy.

[00:33:33] Speaker 01:
And what you said earlier in the argument is that where you have a statewide PUC,

[00:33:39] Speaker 01:
Then the federal government will say, well as a matter of yield.

[00:33:44] Speaker 01:
Yes.

[00:33:45] Speaker 01:
We'll accept those rates.

[00:33:46] Speaker 02:
And the reason is because there's a presumption that a statewide entity which is independent of a utility will arrive.

[00:33:55] Speaker 01:
But his argument was is that there's a junior varsity form of comedy because it's possible that a local entity such as Bay County has enough checks and balances on it and its price setting mechanism that it looks like a PUC.

[00:34:10] Speaker 02:
That's not correct, Your Honor.

[00:34:12] Speaker 01:
I'm not going to rely on that because it's extra record, but it's certainly possible that you have enough checks and balances in your rate setting.

[00:34:24] Speaker 02:
There isn't any checks and balances in this race setting.

[00:34:27] Speaker 02:
When you look at the structure of Bay County, the organizational chart is reflected in the record at 20503.

[00:34:33] Speaker 01:
The five members of the board... If the members of the county set a rate for water, it drives all of the local businesses out of business.

[00:34:41] Speaker 01:
Don't you think the local businesses are going to complain to the politicians?

[00:34:45] Speaker 02:
Your Honor, the regulation is drafted to get at the relationship between the regulator, whether it is

[00:34:54] Speaker 02:
is connected in some way with the utility being regulated.

[00:34:59] Speaker 02:
And here we have a textbook example of a local government that regulates an entity which it ultimately benefits from.

[00:35:09] Speaker 02:
The local government of Bay County benefits from the rates that it determines for its utilities.

[00:35:15] Speaker 03:
That is not what is true that the government argues that debt funds should be given

[00:35:21] Speaker 03:
to the government's established interpretation in this case?

[00:35:25] Speaker 03:
That's an alternative argument we made in our brief, Your Honor.

[00:35:29] Speaker 03:
Where is the government's interpretation articulated apart from arguments in litigation, which do get deference in some scenarios?

[00:35:38] Speaker 03:
Is this just a litigation position scenario, or do you believe the government has an established position somewhere else that I could look to that would justify deference?

[00:35:49] Speaker 02:
Your Honor, there's been a slight mockery of the Air Force article that we relied upon.

[00:35:57] Speaker 02:
But that article was relied upon to show the history of the... Well, I don't know who mocked it.

[00:36:06] Speaker 03:
It wasn't me, certainly, but clearly the government

[00:36:11] Speaker 03:
interpretation of a regulation or a statute can't be defined by a private citizen.

[00:36:19] Speaker 03:
I mean, he happens to be an Air Force officer, but he didn't write it in his capacity as a representative of the U.S.

[00:36:24] Speaker 03:
government.

[00:36:24] Speaker 03:
This is like the Secretary of Commerce giving a speech.

[00:36:27] Speaker 03:
This is written in his private capacity as an individual.

[00:36:31] Speaker 03:
He wrote a law review article that was published.

[00:36:33] Speaker 02:
But it does reflect the interrelationship.

[00:36:37] Speaker 03:
It reflects his view.

[00:36:39] Speaker 03:
That's what he believes the government's position is on these things.

[00:36:43] Speaker 03:
But this history that it provides and it says forth.

[00:36:46] Speaker 03:
But you do recognize how troubling it would be if we as a court were to allow such private individuals to establish a government position and then say,

[00:36:56] Speaker 03:
that the government ought to be bound by that position for that interpretation to be given deference solely by virtue of a private citizen's articulation of it and claim that it's attributed to the government.

[00:37:06] Speaker 02:
Your Honor, it was provided to the court and cited in our briefing to show the history of this debate.

[00:37:13] Speaker 02:
This is not the first time a local government has said

[00:37:16] Speaker 02:
we are independent, even though we run utilities, we own our utilities, and we set the rates for them.

[00:37:22] Speaker 02:
This is not a novel argument.

[00:37:24] Speaker 02:
And the article helps us understand the history of this debate between the federal government and local entities like Bay County.

[00:37:31] Speaker 02:
That is the only reason we relied upon it.

[00:37:33] Speaker 02:
Because again, our doctrine asks

[00:37:38] Speaker 02:
if the government or the litigation position has been consistent over time.

[00:37:44] Speaker 02:
And it has been consistent.

[00:37:45] Speaker 02:
I mean, this article looks at a relationship between the federal government and local government entities going back decades in terms of what the status issue boils down to.

[00:37:56] Speaker 01:
The state's position, I don't believe it cites cases in which this position has been taken, right?

[00:38:01] Speaker 01:
This is the first case.

[00:38:06] Speaker 02:
The City of Tacoma case, which we studied in our brief, reflects a discussion of an earlier version of these cases.

[00:38:17] Speaker 02:
provisions from the early 1990s.

[00:38:21] Speaker 02:
So that would have been the first case where the court looked at the relationship between a local government entity and its regulating body.

[00:38:32] Speaker 04:
Okay, I'm going to bring this to a close.

[00:38:34] Speaker 04:
Thank you, Your Honor.

[00:38:35] Speaker 04:
Your time is up.

[00:38:36] Speaker 04:
Thank both counsel and the cases submitted.